Face reality, think radical or exports will stagnate – MTI

Delivering the keynote at the 30th anniversary celebrations of the National Chamber of Exporters, MTI CEO Hilmy Cader assessed the contemporary issues related to exports in the international market place, the challenges that Sri Lanka would have to face in this background and approaches that Sri Lanka could adopt to meet such challenges. His keynote on Sri Lanka’s exports addressed four questions – ‘Why? What? How? and Where?’.

Referring to the question of ‘Why?’, Cader noted that Sri Lanka had taken 15 years to almost double our exports from US$ 5.5 billion in 2000 to US$ 11.5 billion in 2014, whereas competing countries like Bangladesh and Vietnam have achieved both higher growth factors of 4.7 and 9.4 respectively and also a higher value of exports at US$ 33 billion and US$ 150 billion in 2014. In addition, with Sri Lanka’s imports growing faster than our exports, and exports as a percentage of GDP declining, he emphasized that we cannot ‘live’ with this situation as we are in a very alarming state. He went on to say that what is alarming is not the short term global challenges but the fact that fundamentally we have some major issues with our exports, which he addressed later on through ‘What?’, ‘ How?’ and ‘Why?’.

In relation to the question of ‘What is Exports?’, Cader said, “Firstly we should banish the word ‘Exports’! Your customer is not looking at just getting a product or service out of your country, your customer is looking for an international or regional supply chain”. He stated that this in turn calls for a relook at our ‘archaic’ definition of exports, which needs to change if we are to meet global requirements. According to our current definition, it is an ‘export’ only if ‘the value’ is added ‘on our own soil’. So essentially it is not an export if value is added elsewhere. But now, what global markets demand is ‘in-country’ value addition, which we tend to discourage instead of encouraging ‘Sri Lankan Multi-nationals’.

In terms of measuring our exports, he recommended that focusing on value addition is more important rather than looking at just top-line measurement.

Moving on, he mentioned, “Before we look at exports and what we are going to do, we should firstly, take stock of what the world requires, and secondly, what is it that we can really export. We need to see where we stand, what resources we currently have, what resources we can acquire or extend etc. so that we can look at what our exports are going to be”.

Using the MTI model on ‘what Sri Lanka can export?’, Cader went on to explain that there are 5 areas that we as a country can export from, including; Natural resources, Human resources, Manufacturing capabilities (leading to Industry Specialization), Locational Advantages and Intellectual Property. After which he looked within each of these 5 areas to identify specific opportunities, given the limitations and barriers currently faced.

A few of these suggestions included; higher R&D spend and infrastructure investment in Niche High Value Added Agricultural Products such as spices, essential oils, tea extracts etc.; radical improvements and reforms in the educational supply chain in Sri Lanka to develop and improve Human Resource based exports such as KPOs and Professional services; and the locational advantage Sri Lanka has in being a regional hub as a Gateway to India etc.